Name: _________________________________________ Date: _________________ Block: ________ Civics & Economics: Financial Institutions (CE.12c) & Impact of Taxation (CE.13c) ● Essential Understandings: ○ Private financial institutions act as intermediaries between savers and borrowers that include households and business investors. ○ The government taxes, borrows, and spends to influence economic activity. ● Essential Questions: ○ How do financial institutions make the deposits of savers available to borrowers? ○ How does the government influence economic activity? ● Essential Knowledge: ○ Private financial institutions ■ Include banks, savings and loans, and credit unions ■ Receive deposits and make loans ■ Encourage saving and investing by paying interest on deposits ○ Government tax increases reduce the funds available for individual and business spending. ○ Increased government borrowing reduces funds available for borrowing by individuals and businesses; decreased government borrowing increases funds available for borrowing by individuals and businesses. ○ Increased government spending increases demand, which may increase employment and production; decreased government spending reduces demand, which may result in a slowing of the economy. ○ Increased government spending may result in high taxes; decreased government spending may results in lower taxes. ○ The 16th Amendment to the Constitution of the United States of America authorizes Congress to tax personal and business incomes.